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QUARTER 3, 2016

QUARTERLY PACKAGING REPORT

GLOBALPACKAGING TRENDS

HAVI partners with customers to unleash the power of their supply chains. Our expertise and experience in supply chain

management, packaging, logistics, and recycling & waste help customers address supply chain challenges big and small, from commodity to customer and through end-of life. We offer data-based insights and services that combine a strategic, long-term view with an unmatched commitment to execution. By making connections across the supply chain that no other company can, we help customers transform the way they deliver their value to the world, one challenge and opportunity at a time.

EUROPEHAVI Germany GmbHSchifferstraße 16647059 DuisburgGermanyPhone: +49 (0) 203 7090 2600E-mail: info-europe@HAVI.com

HAVI UK LTD3 Furzeground WayStockley ParkUxbridgeMiddlesexUB11 1EZUnited KingdomPhone: +44 (0)20 8606 3118E-mail: info-europe@HAVI.com

LATIN AMERICAHAVI Latin AmericaAv. Garcia del Rio 2477, 9 BBuenos Aires C1429DEAArgentinaPhone: +54 (11) 4519-0690

OFFICES

NORTH AMERICAHAVI USA (Chicago)

3500 Lacey Road, Suite 600Downers Grove, IL 60515United States of AmericaPhone: +1 (630) 493-7400

E-mail: info@HAVI.com

ASIA-PACIFIC MIDDLE EAST / AFRICA

HAVI Singapore3A International Business Park

Tower B, #08-10/13ICON @ IBP

609935Singapore

Phone: +65 6895-2100E-mail: info-asia@HAVI.com

Printed on recycled paper

HAVI.com

4 Packaging Inside and Out

8 Industry Insider: Packaging Trends— Europe

10 Industry Insider: Packaging Trends— Latin America

12 Industry Insider: Packaging Trends— Asia

14 Deforestation-free’ Commitments

16 Spotlight on Legislation

17 Trendspotting 18 Ask the Expert

20 In the News

21 On the Road

22 Case Study Focus

CONTENTS

QUARTER 3, 2016

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3HAVI Q3 2016 HAVI Q3 20162

PACKAGING INSIDE AND OUT

How can smart packaging impact your business? The Internet of Things (IoT) is a proposed development of which everyday objects have network connectivity, including packaging. Take a look at how businesses can realize commercial value from the Internet of Things.

Internet of Things: The Packaging Connection

IoT has the capacity to touch every aspect of our business. By providing Radio-Frequency Identification (RFID) numbers for every item, there is an accountability that has never been possible before. This can revolutionize the way we forecast, manufacture, ship, and stock— the possibilities are endless.

IOT in RetailThe Internet of Things is starting to change the way we shop, as well. The facts below show us how often IoT is being utilized in Retail.

SOURCES:

http://viewpoints.io/uploads/download_images/_xlarge/Internet-of-Things-in-Retail-Infographic.png

http://www2.deloitte.com/us/en/pages/technology-media-and-telecommunications/articles/internet-of-things-global-mobile-consumer-survey-

infographic.html#

SOURCES:

http://cloudtweaks.com/2016/04/internet-of-everything-industries-numbers/

http://www.industrial-ip.org/~/media/20701%20Internet%20of%20Things%20infographic2%20V2%20VIS.ashx

For example, RFID tags, cameras, and radio antennae can track the movement of items throughout the store, helping with Loss Prevention. Shoppers are also able to use digital tags and interactive displays, so that they can customize products and do research on items. IoT also allows for all devices in the store to talk to each other and CRM for instant customer feedback and retailer action.

IOT in the HomeNot only do we see IoT in business, but we can also see it in our homes. The data below shows the areas in which the Internet of Things has been utilized most.

Though a relatively new buzz term, the Internet of Things has become an astounding system of network connectivity that we can be sure will grow throughout the next decade in business, retail, and the home.

Internet of Things will save

$729 Billion in waste and recycling by 2022

Businesses that have utilized IoT saw increased manufacturing efficiency by

82%while customer satisfaction increased by

45%

$810 billion will be saved in reduced time to market by 2022

56% of smartphone users plan to use their device while shopping

54% use or would like to use digital touchscreens in store

85% of shoppers prefer personalized offers based on their past shopping behaviors

40% Home Monitoring: In home camera footage viewed and controlled by smartphones

20% Entertainment Systems Display: Social media postings

18% Appliance Control: Sensors in appliances send notifications to smart phones

47% Home Control: Lights, burglar alarm, and heating controlled by smartphone

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Utilize Marketing InsightsPACKAGING INSIDE AND OUT

We like to keep our lens open wide so we can capture stories and information that might seem unrelated, but are, in fact, relevant.

Brand Ambition Unusual-shaped packaging is trending well this year, with prototypal triangular shapes and trapezoidal packaging now appearing on store shelves. Patterns and geometric shapes are making their way onto labels, as well. Beyond simply

improving standout on shelves, in some cases, the unusual shape serves to reinforce a meaningful change in brand positioning.

Hampton-Smith, S. (2016, March 1). Five Biggest Packaging Design Trends for 2016, Creative Bloq.

Retrieved from http://www.creativebloq.com

Corbin, T. (2016, March 10). Simpson’s of Hawkhurst Introduces Trapezoidal Box for Goupie, Packaging News.

Retrieved from http://www.packagingnews.co.uk

TheDieline.com. (2015, September 25). Concepts We Wish Were Real, The Dieline. Retrieved from http://www.thedieline.com

Seamless Single-Serve Transparency Market Research’s latest report shows that consumer demand for ready-to-eat food in convenient packaging has not slowed, triggering even more advances in the retort packaging market. Convenient single-serve packages that transform into serving dishes and utensils, using retort packaging and other creative solutions, are also projected to continue strong growth.

Plastics Innovation A growing number of companies are finding creative ways to improve upon the recyclability of plastics, and the Association of Plastic Recyclers (APR) honored five innovations in conjunction with Plastics Recycling 2016. Products are honored due to recent commercialization of a new product or technology that positively impacts plastics recycling where a tangible benefit or innovative first can be identified.

E-Waste Management Market to Jump 23 Percent by 2020, EnvironmentalLeader.com, Environmental Leader, 1/28/2015. Retrieved from

http://environmentalleader.com

$550M E-waste Recycling Facility Set for Hong Kong Ecopark, Waste-Management-World.com, Waste Management World, 5/13/2015.

Retrieved from http://www.waste-management-world.com

SBWire.com. (2016, February 15). Global Retort Packaging Market to Witness High Growth Owing to Increasing Demand for Ready to Eat

Products, SB Wire (press release). Retrieved from http://www.sbwire.com

Lingle, R. (2016, January 19). Single-Serve Stemmed Wine Packaging Coupled for Efficiency, Packaging Digest.

Retrieved from http://www.packagingdigest.com

UPSCALE OVERHAUL The updated packaging provides important consumer information: complete allergen, ingredient, and nutritional data, along with individual product barcodes, social media, and website contact information. The fully recyclable box is also aligned with company sustainability commitments.

GRAPHIC GOODNESS

New Zealand student Jeannie Burnside wanted to develop innovative packaging that served as a “catalyst” to inspire busy people to improve their eating habits. For that reason, Burnside created Meld, a new “meal system that consists of controlled portion sizes and organic whole foods, to cater to the needs of busy health-conscious consumers. Developed to feature organic products, Meld’s packaging is minimal, with a triangular shape that represents the food pyramid.

RECYCLING FRIENDLY LABEL

The Coca-Cola Company and the Vienna-based company, Constantia, developed SpearRC, a recycling-friendly label for PET packaging. The label provides all the benefits of standard pressure sensitive labels. Other advances include the label adhesive staying with the label when removed from the bottle, nonbleed ink, and the label’s ability to float in water. Coca-Cola plans to use the affordable label on all juices and juice drinks within the Simply Beverages line sold in the United States.

ELEGANT EFFICIENCY

201 Innovations has created an unique prototype for a single-serve wine delivery system called Couple. The Couple product design interlocks two wine glasses with an integrated stem for efficient stacking and shrink wrapping; a stack of four interlocked glasses occupies the same footprint as a 750-ml wine bottle. The foot of Couple’s glass doubles as a protective lid over the foil seal as well as a coaster.

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INDUSTRY INSIDER DIGITAL PRINTING

Digital printing is being used by brands to explore the creation of new user experiences by combining digital printing and new technologies, such as digital marketing through smartphone apps. By embedding Wi-Fi connections in packaging labels, mobile enabled packaging is created so that consumers can interact with through smartphones – very high tech and innovative. It is a natural step as mobile usage continues to grow. The ways in which this technology can be utilized varies. Smart packaging labels can provide additional nutritional information via your smartphone. The interest in this type of intelligent packaging is particularly strong from foodservice vendors as information is delivered to the customer without the need for extra packaging and printing, reducing excess waste.

SMART WRAPPING

Smart wrapping can highlight when food is about to lose its freshness, when the product has exceeded its “best before” date, been poorly refrigerated, or passed its expiration date. It also helps foodservice providers combat food poisoning. The packaging changes color when goods have been spoiled or damaged, vital in reducing food waste – a key sustainability concern for the foodservice industry. In addition, it also helps address the food waste issue, which is increasingly becoming a topic people are paying more attention to as environmental and economic damages are coming to light.

ON-THE-GO PACKAGING

Consumers are spending more time ‘on-the-go’, creating a growing “snack society”, driven by the younger generations. This trend is shaping innovation in the food market. High demands for street food, healthy snacks, and quick breakfasts have led to the rise in popularity of single-serve snacks packaged for on-the-go consumption. As a result, packaging is being reinvented as well. The formats vary, but key characteristics are: ease to open and reclose – preferably without the need of scissors, reduced size, and a focus on freshness. Popular solutions include shot pouches, sachets, and shot-size bottles in recyclable materials that cater to snacking on the go without harming the environment. The innovation also extends to exploring new forms factors such as incorporating a sauce container into a lid –

a solution HAVI came up with for a fast food chain to ensure freshness and portability without compromising taste.

QR CODES

For businesses, and consumers that are becoming more interested in where their food is being sourced from, this is an important route to maximizing transparency of the

“farm to table” journey.

The revival in scratch cooking also means consumers are looking for guidance and inspiration to aid their culinary progression, through access to recipes. QR codes enable this in an easy way. Ultimately, businesses QR codes show tremendous potential as you can take advantage of them to take customers on a digital journey, where the packaging leads them to further information on their product purchases, including recipes presented through video content.

PERSONALIZATION

Recently, the sweet and savory spreads market has seen high-profile innovation as the typically long usage life of these products makes them well suited for personalized packaging designs.

Consumers can benefit from the opportunity to customize the name on the jars, especially in the run up to seasonal events as they target the gifting market. Manufactured by the Italian company Ferrero, Nutella is one of the companies that has used personalization to raise the popularity of its hazelnut cocoa spread – consumers love it so much that it has now become a mainstay on their website, making personalized labels a permanent option.

All five key trends above will enable companies to explore new commercial and operational capabilities in the years to come. Leveraging them early in the adoption cycle will require openness, flexibility, and working with new technologies that complement existing processes. Additionally, time will need to be devoted to developing programs that bring the packaging solutions to market, and understanding the consumer response. And finally, time should also be set aside to keep an eye out for the next big five trends. After all, success is all about being one step ahead.

The past few years have brought their fair share of consumer goods industry upheavals. Businesses that want to grow must stay on top of emerging trends and prepare for them before they become mainstream. Certain trends will follow a predictable pattern, while others take more surprising paths. In this article, we give an overview of five trends that are shaping the packaging choices of consumer business today.

By Richard Bunch

HAVI Packaging Director, Europe

KEY EU PACKAGING TRENDS – THE BIG FIVE Dramatic changes in the consumer landscape put new focus on packaging.

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As the Latin American economy continues to grow, so do the associated packaging and waste industries. The evolving growth spurs both opportunities and challenges as variable

trends emerge from the industry drivers. According to survey research conducted by HAVI on the critical forces and changes that could impact packaging’s future, key insights in Latin America include: • Raw material cost, end of life considerations, sustainability, evolving supply chains and LTO/ promotional offers (the largest areas of opportunity)

• Transparency throughout the value chain—including material health—will be a large area of risk, along with

resource and material cost/availability, safety and regulatory pressures will be challenges addressed in the coming decade

• Customization, big data and integration of technology into packaging will enable significant opportunities as well as risks throughout the value chain

TRENDSPOTTING: IMPLICATIONS OF THE DRIVING FORCES

To understand the implications of the key research, it’s important to recognize the industry drivers and how they manifest as trends within the industry. Based on the insights derived above, key drivers include: growth

INDUSTRY INSIDER

By 2025, Latin American GDP will reach US $15.14 trillion (led by Brazil, Argentina, Mexico and Columbia). Driving the growth in Latin America is the populations’ rising disposable income, urbanization, higher female participation in the workforce and an expanding middle class. With this, more and more international, regional and domestic brands are competing for Latin American consumers, wages and agricultural wealth.

KEY LATIN AMERICAN PACKAGING TRENDS

Now & Next: Packaging & Waste in Latin America

markets, the evolution of retail, holistic approaches to design, sustainability, social media/personal technology, emerging technology, laws and regulations and the evolving global economy.

To no surprise, the main issue facing most regions, and especially Latin America, is the environmental impact of packaging: waste management and the recyclability of the material. For example, paper board is perceived most often as an environmentally friendly biodegradable product; unfortunately, in Latin America there are still a lot of serious problems surrounding recyclability and composting due to the food and grease contamination.

As foodservice continues to grow in Latin America, this will continue to gain traction as a challenge as well as an opportunity. Since the industry is expected to grow nearly as fast as the Asia Pacific region, at 3% year over year through 2018, the sub categories of the industry will also expand.

A few of the top trends affecting the foodservice industry include meal kits, e-commerce, local ingredients, and, of course, take out and home delivery options- essentially mobile and on-the-go food packaging. For many restaurants and QSRs, this not only influences their sustainability promise, but their sourcing and capabilities to keep up with and not exceed demand, contributing to waste.

Because of the current lack of infrastructure, there are two-fold complications for foodservice retailers and QSRs in not only sourcing the right packaging in an efficient manner, but also adopting the digital technology that has become more expected by consumers in terms of personalization and customization. For example, what are the packaging requirements to deliver a customized fresh food order to someone’s door which will allow it to sit all day without spoiling? The industry now requires shorter and more frequent runs and shipments, yet incremental costs continue to rise. Until the infrastructure is able to catch up with the trends, the inefficiencies in sourcing, customization and end-of-life solutions will continue.

CAPITALIZING ON TRENDS AND PURSUING OPPORTUNITIES

An industry which grew by $101.5 billion from 2008 through 2013, the value of foodservice in Latin America presents tremendous opportunities for packaging and waste in the coming years. The rising income, growing urbanization and increased female workforce has been steadily contributing to the consumer trends and also driving legislation and recognition of sustainable practices and accountability.

Recognized as a top opportunity in the industry is its ability to produce and promote the use of packaging with the least amount of impact on the environment. Alternative materials, light-weighting, and recognizing opportunities throughout the value chain to decrease the environmental impact of packaging products being sourced and transported will be paramount.

In line with the opportunities to cater to the customer is the growing trend of mobility. Here, foodservice has a vast pool of opportunity for innovation, new technology, integration, and sustainable initiatives. Consumers are looking for options of convenience and mobility, with preference for on-the-go and on-demand foodservice that still maintains the utmost quality, freshness, and brand value. Consumers in Latin America are looking for brands that understand their lifestyle and day to day challenges. They want packaging solutions that allow them to insert a product into any phase of their day while not having to worry about mobility, mess, or complexity.

RECOGNIZING THE RISKS AND PERSEVERING THROUGH THE CHALLENGES

Although GDP continues to rise, the Latin American consumer becomes more appealing, and the workforce strengthens, there are real challenges that lie within the infrastructure which slow the progress and stifles potential innovation in many of the opportunity areas noted above – from environmentally friendly practices to product mobility through package design.

The greatest challenge, as mentioned above, aligns with the greatest opportunity: recycling. The Latin American population has become far more conscious of the environment and their impact on it and its future resources. Unfortunately, the network to manage sustainable waste solutions doesn’t exist.

While litter and waste are handled differently across regions of the world, packaging companies in Latin America are starting to be held more socially responsible and accountable through taxes and fines. However, the material itself and the logistics to enable the use of more sustainable and advanced material are in need of an overhaul. With more limited recyclability and fewer capabilities within the infrastructure to export waste appropriately, more and more companies in Latin America are seeking out partnerships to buy/sell pre-consumer waste. While this will remain as a temporary solution, post-consumer waste is still a great challenge, and the infrastructure to handle both types should be rebuilt in the next 5 to 10 years in order for the industry and economy to remain strong.

By Lizbeth Ramirez

HAVI Packaging Director, Latin America

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INDUSTRY INSIDER

Taking a snapshot of the food packaging industry landscape in China, here are a few of the key trends and concepts to keep an eye on:

HOLISTIC PACKAGING DESIGN: A CONSUMER-FRIENDLY FOCUS

More and more brands are realizing the power of packaging and leveraging their capabilities to connect with consumers. Previously, picking up breakfast from the QSR counter meant sorting through a generic

paper or plastic bag to find a steamed bun among a cluster of paper napkins and plastic cutlery. Now, food contact packaging is gaining a new purpose – not just to hold the food – but also to build a bridge connecting the food to the customer. From digital elements to design, packaging is playing a different role in creating customer loyalty more than ever before.

We have seen steps in this direction with some Western QSRs, including McDonald’s, YUM Brands, etc., but

this packaging maturation is also penetrating a more localized level in China, transforming the consumer experience for smaller Chinese QSR brands and restaurants. Packaging professionals are realizing that small manufacturing changes can have a large impact on ease of use and create a consumer preference. Take, for example, a cup lid. A flat lid on a cup (which we are most familiar with) allows for small leaks when the consumer is holding the cup (although it may be minor, through the front or top of the lid, it still occurs). Through a small change in manufacturing with new technology, by contouring the form of the lid, it’s possible to have a “spill-resistant” lid – even when turned upside down. A small change that most customers may not notice, vastly improves the user experience.

The Chinese packaging industry is also renewing and revamping combo-meal packaging. By refining and restructuring the design, combo boxes will provide a packaging solution for multiple products within a food order that does not require individual packaging, as all components will be able to fit into a transformable container. Customers are able to walk away with everything in one hand. And, in contrast to the generic takeaway bag, the paper-based and special design of the new combo box maintains the quality and integrity of the food even in an extended delivery or commute time.

TECHNOLOGY AND LEGISLATION

Remaining competitive for food brands is paramount. As we’ve seen in the global rivalry among some of the QSR heavy-hitters, balancing consumer trends with competitive offerings is an ongoing challenge and market stimulant.

One way that brands are staying competitive is by reducing costs around their products in order to reduce prices. By not reducing the quality or standards of the food product itself, but by reducing costs of packaging material, global QSRs are able to compete without reducing value. For example, the packaging industry in China has been lightweighting (GSM) materials more and more. This not only provides cost savings while maintaining food standards, it lowers the cost of the product to increase its value in the market. The advanced technology used to lightweight materials also provides an added resource for suppliers, adding value by producing the same quality packaging at a lower price point, while using fewer materials, thereby increasing efficiencies and reducing waste.

One of many material and technology advancements that weaves between the industry and consumer perspectives, a common theme remains prevalent in the importance of reducing waste and increasing efficiencies. The average consumer has a greater awareness of sustainable practices and has a higher expectation of corporate responsibility. Even with an understanding of legislation and government regulation, consumers respect - and are more loyal to - those brands that are ahead of mandated practices. In China, local government will begin to enforce more sustainable compliance laws such as pulp vs. resin-based packaging over the next five to ten years, which will be hugely impactful. That being said, pilot regulations and consumer trends have already begun driving company investments and best practices, working with vendor partners to create the material to meet regulation standards of the future.

ECOMMERCE OF THE FOOD INDUSTRY: ONLINE TO OFFLINE DELIVERY

One of the leading markets in China, and most certainly in the food industry, is delivery. Even more specialized and on-demand than ever before, the O2O (online to offline) delivery market is pushing food packaging in a new direction. On pace to generate more than 40 billion dollars in 2016 – a market that was at just 10 billion dollars only four years ago – food delivery requires specialized packaging across numerous and various applications.

With pressure to make packaging more and more competitive and convenient for transportation, at four times the typical volume, companies with larger pools of resources will become stronger and more innovative as the industry becomes more saturated over the next three to five years, and more developed by merged brands with highly competitive standards of quality, safety, and innovation.

Igniting a ripple effect of specialized packaging innovation and manufacturing, the packaging industry in China finds increased opportunity in the delivery market to create a user experience through a holistically designed packaging strategy. With delivery or catering, there is more opportunity to showcase brand value and messaging not only on a website or within a restaurant location, but the chance to reach an even greater audience of indirect consumers. If it is done with intentional meaning, then that brand message can reach potential—as well as existing—customers.

As the global food market continues to evolve, the sub cultures and industries that respond and remain flexible to the changes are those that help to shape its direction. Through cross-functional evaluations and production capabilities, the food packaging industry in China has been evolving with the changing landscape in order to not only meet and exceed expectations of consumers, but to maintain competition and stay ahead of legislation and trends.

By Gavin Cheng

HAVI Packaging Director, Greater China

KEY ASIAN PACKAGING TRENDS Food Packaging in China — What’s Next?

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‘Deforestation-free’ CommitmentsWhen I first read about ‘Deforestation-free’ supply chains, my first reaction was that this goal was out of step with the present sustainability agenda. It seemed like a step backwards. Aren’t we well beyond the need to be concerned with such damage and shouldn’t we instead focus on value-add management techniques rather than deforestation? To answer this question, I needed to remind myself to look outside of my specific realm of the Supply Chain, which is focused on paper-based packaging, and take a broader look at Supply Chain concerns.

The forest products sector, such as pulp, paper, and solid wood, has built a great program that has been in place since the mid 1990’s. Forest management standards, such as FSC

(Forest Stewardship Council) and PEFC (Programme for the Endorsement of Forest Certification), prohibit deforestation, in addition to promoting management practices that support healthy forests. Thus, companies that certify their products to FSC or PEFC are verified

by a third-party audit to avoid sources associated with deforestation, at minimum.

Who is making these commitments?Many major brands, including Nestle, Johnson & Johnson, Mars, SC Johnson, General Mills, and McDonald’s are making these Deforestation-free commitments. These companies source a range of agricultural commodities and products as well as paper packaging. Although

the issue of deforestation was historically associated with trees harvested for the forest products sector, today, forests are threatened by competing uses for agricultural land and other development. Thus, to have a holistic approach to the topic, companies are working to address the issue of deforestation across their entire Supply Chain. Why now?

Many leading brands released such commitments in the year or two prior to the 2015 UN Conference on Climate Change. The agreement forged in Paris formally recognized the role forests play in managing carbon emissions and ability to impact climate change.

According to the World Wide Fund for Nature, some 46-58 thousand square miles of forest are lost each year—equivalent to 48 football fields every minute. Because forests soak up greenhouse gases, deforestation prevents this opportunity at an estimated 15% of global emissions.

What does ‘Deforestation-free’ mean?Sustainability reflects nature in that it is always evolving! It is a vibrant space, where new science and perspectives add to current knowledge and framing of an issue. The way commitments are described may vary from one company to another.

According to a working paper by the Center for International Forestry Research (CIFOR) (‘Deforestation-free commitments’, 2015) there are four main terms for such commitments.

• ‘Zero Deforestation’, which is also known as ‘Deforestation-free’ or ‘no-Deforestation’

• ‘Zero gross Deforestation’

• ‘Zero net Deforestation’

• ‘Zero illegal Deforestation’

The different terms translate to different allowable or prohibited actions on the ground. For example, the weakest of these equates to allowing deforestation to the extent that the activity complies with the law. Zero net Deforestation allows for deforestation in one location as long as it is offset by plantation in another. Despite what the term implies, the scope can extend to social concerns such as stakeholder engagement.

What are companies doing to meet this goal? To tackle this issue, companies are gaining visibility into Supply Chains and working with trusted partners that can help provide awareness of risks. Then, work is done to establish the baseline for the risk, identify risks, and prioritize actions to eliminate them by putting processes in place to vet new sources added to the Supply Chain.

What does this mean for packaging?Packaging can be made from different raw material resources. For forest-derived resources, there are well established forest management and chain of custody standards that are active in many key markets around the globe. FSC and PEFC are two main internationally recognized standards. However, depending on the company’s definition of Deforestation-free there may be gaps identified even for certified products.

For other raw materials, assurances of Deforestation-free may be more challenging as certification/verification systems for raw materials other than forest products are non-existent, emerging or relatively new. As with most things, Deforestation-free commitments will be managed with highest prioritization on those raw materials with the highest potential risk. Thus, companies may not request assurances on all raw materials.

ConclusionForest loss remains a significant issue. Leading brands are acknowledging this potential across entire supply chains, including food, packaging, and other raw materials. They are mapping Supply Chains, identifying risk, and taking action on the highest potential risks to ultimately meet their public commitments.

So, it is recommended that companies do the work to understand their raw materials, source origins, and are prepared to defend sourcing practices - prioritizing those that are high risk. HAVI has enabled clients in this capacity across global supply chains.

A GREENER PATH

By Jennifer McCracken

HAVI Director Sustainability

According to the World Wide Fund for Nature, some 46-58 thousand square miles of forest are lost each year—equivalent to 48 football fields every minute.

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From our EU office: UNITED KINGDOM: UK paper cup manifesto launched

The Foodservice Packaging Association (FPA) and Paper Cup Recovery and Recycling Group (PCRRG) have launched an industry-wide Manifesto with the objective of significantly increasing paper cup recovery and recycling rates by 2020. The Manifesto has more than 45 signatories, representing each stage of the paper cup supply chain from raw material suppliers, cup manufacturers and retail high street brands to waste and recovery operators and paper reprocessors.

The Manifesto is a voluntary commitment to deliver systemic change that will increase the sustainable recovery and recycling rates of used paper cups. The Manifesto objective is that by 2020, the greater majority of the UK population will have access to information, schemes and facilities that enable used paper cups to be sustainably recovered and recycled.

FOR FURTHER INFORMATION REGARDING THE NOTIFICATION, SEE THE FOLLOWING LINK: HTTP://WWW.PACKAGINGNEWS.CO.UK/NEWS/MARKETS/DRINKS/PAPER-CUP-MANIFESTO-LAUNCHED-WITH-FOCUS-ON-RECYCLING-28-06-2016

From our North America office: UNITED STATES: President Signs Genetically Engineered Food Labeling Bill A new federal genetically engineered (GE) food labeling bill has been signed into law in the United States. The bill will create a nationwide labeling standard for foods containing GE ingredients, and puts an end to inconsistent state legislation that has developed over the past few years.

The bill allows food companies to label GE food with a text label, symbol, or electronic label accessible by smartphone. With this latter option, consumers would be directed to “scan here for more food information” with a smartphone to find information about the food they want to buy.

FOR FURTHER INFORMATION REGARDING THE NOTIFICATION, SEE THE FOLLOWING LINK: HTTP://WWW.MONDAQ.COM/UNITEDSTATES/X/517458/FOOD+DRUGS+LAW/PRESIDENT+SIGNS+FEDERAL+GMO+ FOOD+LABELING+BILL

Spotlight on Legislation

TRENDSPOTTING

Seeing through Packaging: The Line of Sight to More Transparent Packaging Information Are you aware of every ingredient that you put into your body? Is your packaging telling consumers all the important facts? Consumers are becoming more and more cognizant of this. Recent studies done by the Center for Food Integrity (CFI) show that consumers are becoming more curious about what’s in their food. This leads to the ever rising demand for packaging transparency.

The Beer Institute A national trade association for brewing companies has required a change in their labeling to show all ingredients. Many beer companies solely promote the alcohol percentage, but the trade association has changed its guidelines as packaging transparency becomes a demand from consumers. Companies like MillerCoors, AnheuserBusch, and HeinekenUSA have started following these guidelines.

Not Yet Recyclable Companies strive to be sustainable when it comes to packaging, though sometimes they do not reach the goals that consumers set for them. Recently, companies have started putting a label on their packaging that shows consumers their product is not yet recyclable in an effort to be transparent.

Dorset CerealsDorset Cereals, based in Dorset, UK, is an organic cereal company that has developed a unique way to package their nutritious cereal. The boxes used to contain their product have cut-outs in the shape of leaves, so that a consumer is able to see the wholesome cereal inside. This transparent window targets consumers who have the desire to know what they’re putting in their body before purchasing the product.

H2R How2Recycle is a company that many other companies are looking to for packaging labels in terms of sustainability and waste management. How2Recycle has developed labels designed to tell consumers exactly how to recycle the product for those who are unsure. Large companies, such as McDonald’s, Target, Kellogg’s, Clorox, and MinuteMaid have integrated these labels into their packaging.

New regulations, responses to legislation, and industry-driven voluntary guidelines for packaging across the globe.

We want to know! We are always looking for the trend behind the trends, and what’s coming next. Take a moment to complete this trend spotting survey on single sized packaging. Come back for the next issue and see the thoughts of other people in the industry based upon this survey!

https://www.surveymonkey.com/r/GFPCBTJ

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AN INTERVIEW WITH Dan Donofrio VICE PRESIDENT, PACKAGING

ASK THE EXPERT

Lean and Six Sigma – sometimes referred to on the whole as Lean Six Sigma in a contributive approach – are both structured and proven problem-solving tools.

Dan, tell us a little about yourself. I have been with HAVI for nearly three years, and am responsible for our North American strategic sourcing, quality assurance, and business process management functions.

After college, I experienced one of the most impactful anchors to my career. Working as an engineer for an automotive supplier in England, we made components for engines. A lot of what I apply now can be

attributed to that organization, utilizing all of the hands-on practical components of what is now known as Lean, or Lean Manufacturing. Evolving my career into the appliance business, I learned the application of Six Sigma and then how to combine the two.

What’s the difference between Lean and Six Sigma?

Lean and Six Sigma—sometimes referred to on the whole as Lean Six Sigma in a contributive approach—are both structured and proven problem-solving tools. Both methodologies drive tactical approaches towards generating more efficient and effective organizational processes and business operations, aimed at improving profitability.

So what’s different? View the methods as toolboxes—they are their own separate set, with various drawers and compartments—and once you understand your problem at hand, you’ll know which toolbox to open.

Consider Lean as an elimination of waste (e.g. time, resources) with a fairly simple, low-cost method of analysis and application. Essentially, the methodology follows a visual and categorical process of separating information out to put it back into a more effective order, creating a standard repeatable workflow with value-added activities. The idea here is to keep balance and rhythmic workflow in order to match output to demand.

Six Sigma is a data-oriented approach to reduce variation. Six Sigma works on the theory of loss function: the further you get from the target, the larger the associated cost is to perform that activity. Movement from the target indicates a change, and that change signals a variation in the process. For example, a cup and a lid snap together a certain way – and in the manufacturing process, those lids and cups maintain certain specifications and integrity so that they always fit the same way. Loss function occurs when the fit isn’t right. In this example, when a cup is too small or a lid too big, the performance is compromised. Essentially, Six Sigma offers a statistical approach to determine the cause of variation and reduce or eliminate it in order to increase profitability and customer satisfaction.

Why are these important when it comes to today’s packaging development and manufacturing?

In packaging, fifty to sixty-five percent of product cost is in raw material. And, to produce packaging and remain competitive, you need to invest in capital—machines, equipment, tools, robotics, engineering, etc.—in order to have the most efficiently optimized factory. With these two components, the majority of the product cost is largely set. Your profit margin is based on the rest of your costs: labor and equipment performance (speed, yield, and uptime) for efficient operations. In order to optimize every step of the manufacturing process and maintain the highest profit margins, it’s critical to apply tools like Lean and Six Sigma on an ongoing basis. Operators can evaluate and prioritize problems that could be hurting profitability with Lean and Six Sigma. Because margins are so slim, it is important to identify the critical problems in order to understand which tool to use to eliminate or reduce the problem in efficiency – using the wrong tool will give you the wrong result, and identifying issues in product design vs manufacturing will be critical.

What is being done differently today vs. ten years ago?

Lean and Six Sigma have been adapted to function in a variety of industries and capacities over the last ten years. There is a broader understanding of both concepts throughout industries as Lean and Six Sigma have been shared across business sectors and generations. Specifically, the concepts have been applied more widely to service and management type industries. Lean and Six Sigma exhibit systematic designs to problem-solving, which many professionals have recognized as translatable and repeatable methods that can be easily put into practice.

Most recently, we see the concepts being applied behind the counter at QSR’s. Minimizing the time between an order being placed and the product being handed to

the customer has become a driving force in competition among QSR brands that headline speed as a key attribute.

Do you have any tips that might assist an organization with its packaging process improvement?

There needs to be a culture that is open to change with a continuous learning mentality. The executive team must emphasize that things can always be done faster, better, or more efficiently. In order to ensure this, there needs to be a safe environment for employees and colleagues to share insight when they recognize opportunities for improvement. The organization needs to continually invest in its people and systems in order to leverage these proven and simple structured problem solving tools to increase profitability.

Consider Lean as an elimination of waste (e.g. time, resources) with a fairly simple, low-cost method of analysis and application.

Essentially, Six Sigma offers a statistical approach to determine the cause of variation in loss function and reduce or eliminate it in order to increase profitability and customer satisfaction.

18 HAVI Q3 2016 HAVI Q3 2016 19

BULLETIN

HAVI Announces Sustainable Food Packaging Packaging Strategies JUNE 2016

The upcoming release of the

SIX500™ disposable food

packaging is featured in an article

introducing the breakthrough

packaging developed by HAVI and

Manitowoc Foodservice, Inc. The

article highlights the innovative

approach of integrated packaging

and equipment perspectives, key

challenges facing the industry

which led to the development of

this packaging solution, as well as

the packaging’s key benefits for

operators.

http://www.packagingstrategies.

com/articles/88872-havi-global-

solutions-announces-disposable-

food-packaging

E VISIT HAVI.COM TO LEARN MORE

On the Road

On-The-Go Consumption: Reshaping Food Packaging DesignPackaging News MAY 2016 Jocelyne Ehret examines the

increasing need for versatile

portable food packaging.

http://www.packagingnews.co.uk/

features/comment/on-the-go-

consumption-reshaping-food-

packaging-design-jocelyne-

ehret-18-04-2016

E VISIT HAVI.COM TO LEARN MORE

QR Renaissance?Packaging Europe MAY 2016 John Nicholson provides an

explanation for the initial low QR

code adoption rates and discusses

how QR code technology can be

revived and could particularly be a

useful way for brands to engage with

the millennial generation.

http://www.packagingeurope.com/

Magazine/index.html#64

E VISIT HAVI.COM TO LEARN MORE

Transforming the Packaging Landscape Innovations in Food Processing & Packaging MAY 2016

Phil Davidson outlines why

sustainability remains a key issue

for the packaging industry, and

how PET technology is a significant

breakthrough that is transforming

the way companies think about

packaging and sustainability.

http://www.innovationsfood.com/

May_20161.htm

E VISIT HAVI.COM TO LEARN MORE

Forecasting the Customers of the Future Brand Packaging MAY 2016

Jill Ahern, Senior Director, consulting

services, at HAVI shares insights

on future consumer and customer

trends and how brands can adapt

to stay ahead by keeping up to date

with technology and insights and

focusing on customer engagement

through packaging.

http://www.brandpackaging.com/

articles/85349-forecasting-the-

customers-of-the-future?v=preview

E VISIT HAVI.COM TO LEARN MORE

In the News

European Foodservice SummitSEPTEMBER 27 – 28, 2016

ZURICH, SWITZERLAND

The Summit is the number one European Platform for the restaurant Industry. Issues discussed are trendsetting and on tomorrow’s agenda. The Summit has created a think tank to analyze the most important changes in the industry as well as an annual forum where attendees may share their thoughts on a regular basis. The people who attend are the industry leaders responsible for shaping the European restaurant landscape for the future.https://www.gdi.ch/en/Think-Tank/Conferences/17th-European-Foodservice-Summit -2016/229345_234194_20160928/1

E VISIT HAVI.COM TO LEARN MORE

57th annual MUFSO (Multi-Unit Foodservice Operators) ConferenceOCTOBER 23–25, 2016

HYATT REGENCY REUNION,

DALLAS, TX

MUFSO brings together the restaurant industry’s top leaders, innovators, experts and change makers for 2-½ days of high-caliber educational content laser focused on the restaurant business. Attendees can take advantage of thought-provoking keynote speakers, interactive panel discussions and highly engaging one-on-one interviews with industry visionaries, as well as unique networking opportunities and the latest in food and spirits. MUFSO has it all! HAVI is participating as an exhibitor in the Supplier Exchange in booth 610.http://www.mufso.com/2016/public/enter.aspx

E VISIT HAVI.COM TO LEARN MORE

Packaging Innovations SEPTEMBER 14–15, 2016

LONDON, UK

The event brings together over 170 leading suppliers and over 4,000 packaging buyers to share ideas, network and of course, do business. Once again the exhibition will be complemented by a range of offerings, from seminars to networking events, to help you get the solutions, contacts and know-how to take your packaging project leaps and bounds ahead of the competition.http://www.easyfairs.com/events_216/packaging-innovations-london-2016_81663/packaging-innovations-london-2016_81664/

E VISIT HAVI.COM TO LEARN MORE

20 HAVI Q3 2016 HAVI Q3 2016 21

OVERVIEWAfter experiencing initial success and interest in the retail segment, a leading producer of dry food products soon realized that their current in-house packaging lines designed primarily to service the foodservice segment could not keep up with demand. The company partnered with HAVI to identify opportunities within their existing multi-state manufacturing network to improve finished package quality, increase product shelf life, enhance production line efficiencies, and modify packaging formats to support the growth of their core foodservice business and enable further expansion into retail channels.

HAVI advises a major food company on packaging equipment, material, and operational opportunities, enabling expansion into the retail channel

CASE STUDY FOCUS

Cross-functional stakeholder interviews were conducted by HAVI to gain a deeper understanding of the major issues they believed were causing the most disruptions today. IMPROVED PRODUCT QUALITY

AND INCREASED SHELF LIFE through low cost, low complexity machine changes enabling consistent Nitrogen flushing to control Oxygen levels within the package.

REDUCED PRODUCT GIVE-AWAY AND COST through correcting check-weigher calibration issue that was causing operator to overfill packages by 10%-15% in order to get the packages to pass check-weighing.

IMPROVED FIRST TIME RIGHT PACKAGE QUALITY when producing dry granular products by using static dissipation devices on primary packaging equipment to reduce product caught in the package’s seals that compromised seal integrity.

DROVE IMPROVED OPERATIONAL EFFICIENCIES by centerlining and documenting machine settings for 15 packaging lines and for the each SKU produced.

IDENTIFIED AND RECOMMENDED A NEW HIGH SPEED FLEXIBLE PACKAGING ASSET with a broader range of packaging sizes and design formats.

IDENTIFIED THE NEED FOR A MULTI-YEAR PACKAGING ASSET STRATEGY covering their four factories to consolidate lines, increase manufacturing flexibility, reduce labor and increase packaging capacity to meet future growth goals.

BENEFITS

CHALLENGE

The company and its operation grew up serving the foodservice industry, which is extremely price sensitive, driving producers to minimize total systems cost. Most of the company’s packaging machines were more than 15 years old and designed to run a limited number of SKUs and large size packaging formats that were not necessarily aligned to consumer and retail segment packaging needs. A recently purchased flexible packaging asset, to service R&D development needs, was pressed into service in order to augment existing capabilities and enable retail packaging formats. Growing demand for retail products quickly exceeded capacity. Additionally, the company had been through recent turnover within their technical departments and lacked the necessary knowledge and expertise to identify solutions to enable the business to reach their growth goals. With a complex system challenge, HAVI determined that a holistic solution assessment would uncover new avenues for company growth.

SOLUTION

HAVI’s expert team conducted in-depth assessments of more than 15 packaging lines across four factories to gain a deeper understanding of how the lines were being operated and maintained, and how they performed. Cross-functional stakeholder interviews were conducted with operators, maintenance, quality assurance, engineering, packaging, distribution, planning and production site leadership to gain a deeper understanding of the operation’s history, what improvements have been made in recent years and the major issues they believed were causing the most disruptions today. This stage of the analysis also included a review of the SKU mix and volume projections for each of the product lines. HAVI was then able to identify gaps and align packaging requirements for each product line by blending network needs for both foodservice and retail packaging.

HAVI’s expert team then assimilated all of the learnings and, combined with their broad industry experience and knowledge, provided the company with new insights, best practices, targeted solutions, and a wide variety of recommended changes to help them to improve and be in a better position to support business growth objectives.

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